Proxy Blog

Pfizer Inc. 

March 31, 2020

The annual proxy for this pharmaceutical company had the following proposals: 

  1. Proforma votes on directors, the appointment of auditors, and executive compensation 
  2. Shareholder proposals regarding written consent, enhancing proxy access, report on lobbying activities, independent chairman, and gender pay gap 

Magni voted as follows: 

  1. For proforma proposals.
    -Directors – The board has a majority of independent directors and some have CEO/CFO experience with other companies. The compensation of directors is disclosed with a meaningful portion in equity where the equity has restrictions to align director incentives with long-term value creation. 
    -Auditors – There appear to be no controversies with the financial statements of the company.
    -“Say-on-pay” advisory vote – Disclosures on shareholder engagement and the peer group, including benchmarking of the company against the peer group covered the required topics. 
  2. For and against shareholder proposals. 
    -Against written consent – Per the Magni position paper, Magni routinely votes against these proposals.
    -For enhancing proxy access – Enabling shareholder interaction is part of good governance. Generally, Magni votes for proposals that encourage and/or enable such interaction. This proposal was harder to support than others. It was not well worded. At the end of the day, the intent was worth supporting.
    -Against report on lobbying activities – The company already provides good disclosures of lobbying activities. This proposal seeks to lump industry group activities with political activities. There are good reasons for a company to participate in an industry group. Many of those reasons are unrelated to lobbying. Assuming all such industry activity as political is wrong.
    -For independent chairman – An independent board is an important part of good governance. An independent chairman is an element of an independent board, though there are situations where an independent chairman does not make sense (e.g., a visionary founder where a material portion of the company value is connected to the founder). This company does not have one of those situations.
    -Against gender pay gap  Gender equity is an important issue. That said, there are two reasons for voting against the proposal. The first is the use of generic and inaccurate information in the shareholder’s supporting statement, along with the proposal requiring the company to report a misleading metric for gender equity. The second is the company’s prior and current efforts to address gender inclusion. The company has made good progress and should be encouraged to continue with its current efforts.